The Season For Records Is Most Likely Over

A report from the New York Post. “Keith Richards took a hit on this rock star apartment. The wrinkly rock royal and his wife, Patti Hansen, just sold their posh downtown digs for $9 million, according to city property records. That’s far less than the apartment’s $12.32 million original asking price — and a striking $1.5 million less than the couple paid for the pad in 2014.”

From Mansion Global on California. “Grammy-winning singer-songwriter Usher has sold his Spanish-style estate in Los Angeles for $3.3 million, listing records show. Usher seemingly sold the house at a loss as he purchased it in 2015 for $3.36 million via a limited liability corporation, Mansion Global has previously reported. The sale price represents a 16.7% discount from the original listing price.”

The Carroll County Times in Maryland. “The median sale price for homes in the Baltimore region dropped $10,100 from September to October and remained unchanged from a year ago. October’s median sales price of $259,900 marks the third month of dipping prices after a sustained rise that peaked in June at $285,000, according to data provided by MarketStats.”

“Median prices dropped in Anne Arundel County to $325,000 from $329,000; in Carroll County to $315,750 from $320,000; in Harford County to $240,000 from $245,000; and in Howard County, which remained the area’s most expensive jurisdiction, to $375,000 from $404,990.”

The Morning Call in Pennsylvania. “The Greater Lehigh Valley Realtors Group is projecting a period of ‘relative calm’ in the housing market for the remainder of 2018 — ‘relative’ being the operative word. Coming off an overheated summer and an unusually warm start to fall, the numbers point to a welcome balance in the housing market, the group’s latest report notes.”

“Nationally, a cool-off began earlier, with data from the National Association of Realtors showing a decline in existing home sales across the country in September after a stagnant August.”

“The takeaway: the season for records is most likely over. ‘Prices, though still rising, have widely reduced the march toward record highs,’ GLVR President Sean LaSalle noted.”

The Holland Sentinel in Michigan. “With inventory down and the number of buyers on the rise, the summer housing market was red hot. Now, according to local realtors, the market has shifted toward a balance moving into the holiday season.”

“According to Dave DeYoung, another realtor at Coldwell Banker Woodland Schmidt, it was not unusual for houses in the $150,000-$200,000 range to sell within a few days after receiving multiple offers above asking price.”

“‘It was a feeding frenzy,’ said DeYoung. ‘And part of what created it was a panic in June and July because interest rates started to steadily increase. But it’s balanced out from that. Now, as a buyer, you have a better opportunity to get a home at a fair price, as opposed to feeling like you just paid $5,000 too much. So, if you price your home competitively — rather than fluffing like sellers could this summer — your home will sell.'”

From Patch Renton on Washington. “Could this be fallout from HQ2? Are you in the market for a bargain? Well, the most expensive home in Renton is now $50,000 cheaper. This 3,700 square-foot home was just built this year.”

‘It was a feeding frenzy…And part of what created it was a panic in June and July because interest rates started to steadily increase. ..Now, as a buyer, you have a better opportunity to get a home at a fair price, as opposed to feeling like you just paid $5,000 too much. So, if you price your home competitively — rather than fluffing like sellers could this summer — your home will sell’

This is where the REIC really screwed up. This mania isn’t just in Los Angeles or Manhattan. It’s in little towns and valleys all over the US.

3 years of gains already wiped out on the high end. People have a hard time accepting, or even understanding, where the market is at right now.

The median priced home of many west coast markets is losing $2,000 – $3,000 per month right now, some even more. That means sellers, assuming it’s priced correctly in the first place, need to trim $3k off the price every month just to stay with the trend.

Most loan owners have no idea their “equity” is evaporating this quickly right now, but in a year’s time we will likely see prices have fallen much more than $36k in a lot of these markets, probably more than double that in the Bay Area.

I think 2015 was probably the peak for high-end LA, just like it was for Miami, Manhattan and the Hamptons too. For medium and low-end the bubble kept expanding, but that was because what propped up the market were newly-minted borrowers with Rocket Mortgages and 50% LTV, and they weren’t buying $3 mil houses.

That’s on the order of losing a month’s worth of rent every month. At that rate of loss, coupled with all of the high costs of ownership, what’s going to keep the poor amateur investor-landlords in the game?

“Grammy-winning singer-songwriter Usher has sold his Spanish-style estate in Los Angeles for $3.3 million, listing records show. Usher seemingly sold the house at a loss as he purchased it in 2015 for $3.36 million via a limited liability corporation, Mansion Global has previously reported. The sale price represents a 16.7% discount from the original listing price.”

Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, made those remarks in an interview with CNBC Thursday morning.

“We’re in a situation right now that the Fed will have to look at asset prices before they look at economic activity,” he said. “It’s a difficult position.”

Through Wednesday, the S&P 500 (SPX, -0.88%) was down 7.3% since the end of the third quarter, leaving it with a 1.1% year-to-date gain. The Dow Jones Industrial Average (DJIA, -0.95%) was off 5.2% in the quarter to date. A selloff in tech shares has left the Nasdaq Composite (COMP, -0.58%) off more than 11% in the third quarter. Stocks were adding to losses on Thursday.

The Fed is widely expected to deliver its fourth rate increase of 2018 in December, lifting the fed-funds rate to a range of 2.25% to 2.5%, and to continue raising rates in 2019.
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“We’re in a situation right now that the Fed will have to look at asset prices before they look at economic activity,” he said. “It’s a difficult position.”

Too bad the Millennials are already buried in student loan debt and have meager incomes. The falling labor participation rate will exert a drag on economic activity. The boomers are retiring, so they will eventually sell their assets at a loss.

The global economy has hit a soft patch, putting the U.S.’s robust growth at risk should the slowdown persist.

Economic output in Japan and Germany contracted in the third quarter, while in October consumer spending in China hit its slowest pace in five months and bank lending fell, according to data released Wednesday about the world’s biggest economies after the U.S.
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London (CNN Business)
The global economic slowdown is happening and could spread to the United States next year.

The economies of Germany and Japan shrank in the third quarter, according to data published Wednesday, providing a sharp contrast to another quarter of strong US growth. In China, there are signs of a deepening economic malaise.
The reasons for the weak performance are varied, and economists believe that both Germany and Japan will dodge recessions by returning to growth soon. But the data underscore the major challenges faced by many of the world’s largest economies.
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